When you hear that a house is “under contract,” it means that the seller has accepted an offer from a potential buyer. However, the sale has not yet been completed. The period between when a seller accepts an offer and when the sale is finalized is known as the “under contract” phase. During this time, both parties work to fulfill all the conditions outlined in the contract terms.
So, what exactly happens when a house is under contract?
When a house is under contract, the buyer will typically have a set period, typically a few weeks, to complete inspections and other investigations of the property. During this period, the buyer can back out of the contract if they are not satisfied with the results of their investigation. This contingency clause protects the buyer from taking on any unexpected liabilities or repairs.
2. Appraisals and Financing
The buyer’s lender will order an appraisal to determine the home’s fair market value. If the appraisal comes in lower than the purchase price, the buyer can ask the seller to lower the purchase price. If the seller refuses, the buyer can choose to either terminate the contract or pay the difference out of pocket.
3. Final Walkthrough
Before the sale is finalized, the buyer will be given a final opportunity to walk through the property and ensure that everything is in the same condition as it was when the offer was made. This ensures that there have been no changes or damages made to the property before the sale.
The final step in the under contract phase is the closing. This is where the buyer and seller sign all the necessary paperwork to transfer ownership of the property. The buyer will typically bring a down payment, and the seller will receive the net proceeds from the sale.
In conclusion, when a house is under contract, it typically means that the seller has accepted an offer from a potential buyer, but the sale has not yet been completed. During this phase, both parties work to fulfill all the conditions outlined in the contract terms. Once those conditions are met, the closing and transfer of ownership can take place.